Singapores Economic Development - Essay Example

Singapore Introduction Singapore is a metropolis that is officially referred to as the Republic of Singapore. It is an independent city-state and an island nation in Southeast Asia. Singapore city is an urban area which means it is a geographical region with a higher population density than the surrounding area. Urban areas are further categorized by size. The US Department of Census defines an urban area as having core group of census blocks with at least 1000 people per square mile and surrounding census blocks with at last 500 people per square mile. A census block is thus the smallest area for which all census data is tabulated. In urban areas census blocks are usually approximate city street blocks. Urban clusters are urban areas less than 50,000 people. Singapore is an urbanized city since it has got 50,000 or more people. Singapore lies off the southern slant of the Malay Peninsula and is about 137 kilometers. Singapore is north of the equator and the city’s territory is made up of the pastille-shaped major island, frequently known in English as Singapore Island and in Malay Pulau Ujong (Edwin, 2008). Singapore separates with peninsular Malaysia to the north by the Straits of Johor and to the south with Riau Islands of Indonesia by Singapore Strait. Singapore is extremely urbanized and very little or no original vegetation remains. Singapore is a key commercial hub of the world and has got the fourth largest financial centre together with the one of the main five busiest ports in the world. Singapore’s diversified and highly globalised economy is dependent on trade, particularly manufacturing, with about 26% of Singapore’s GDP as at 2005.Singapore’s per capita income is the world’s third highest ranks really highly in terms of education, government transparency, healthcare together with economic competitiveness. Inspite of all that, Singapore ranks poorly in terms of press freedom (Tong, 2011). Singapore has got a population of over 5 million, with an estimated 2 million being foreign born. Even though the city is ethnically diverse, there is dominance by ethnic Asians and 75% of the total population is Chinese, with considerable minorities being Malays, Eurasians and Indians. Four official languages are spoken here and they are Malay, English, Tamil and Chinese. There are several economic forces that hold the Singapore city together. Singapore’s economy is dependent mostly on refining of imported products and exports more so in manufacturing sector and this made up 27.2% of the city’s GDP in the year 2010.Singapore’s manufacturing sectors includes considerable petroleum refining, electronics, mechanical engineering, biomedical science and chemicals. For instance in the year 2006, Singapore made history by producing around 10% of the world’s foundry wafer output. Singapore’s economy is diversified, a move that makes the government sees as important for stability and growth, inspite of its size. Tourism is another factor that holds the economy of Singapore together and in 2007, the country had about 10.2 million visitors (Tong, 2011). In order to promote tourism and encourage more tourists to visit, the government made gambling legal in 2005and permitted 2 casinos (integrated resorts) to be built. Singapore also uses medical tourism to promote itself as a medical hub. Every year, Singapore receives around 200,000 foreigners seeking medical care. Singaporean medical services seek to provide at least a million foreign patients with Medicare annually and subsequently generating 3 billion US dollars in income. Singapore is also an education hub and due to this, many foreign students have enrolled to study in Singapore. Thus there are over 80,000 international students who studied in Singapore in the year 2006.In addition, more than 5,000Malaysian students do cross the Johor-Singapore Causeway, in the hope that they will get a better education in Singapore. In the year 2009, a record, 20% of the total student population in Singaporean colleges was foreign students. These students were mostly from China, India and ASEAN. Apart from that, Singapore is a global leader in many other economic frontiers such as the fact that Singapore is not only the fourth principal financial centre in the world, it also has got the second biggest casino gambling market, it is also the global leader in oil-rig production and also boasts of the top three position in the world as an oil-refining centre. Singapore’s economic development model over the past four decades has been based on exportation originally manufactures that were labour intensive to major world markets, which was followed by uptake of advanced technology together with value added ladders which acted as comparative competitive advantage shifts. Thus economic development in Singapore, Just like in other Asian tigers has been state-directed and is characterized by a managed-float currency regime such as Hong Kong which is based on capital flows and free trade. Singapore’s economy continues to be firmly state-directed while simultaneously diversifying into services that are of high value but with a heavy dependency on a workforce that is imported. The growth of Asia’s economy follows the comparative advantage theory which states that nations can boost the value of their producing and consuming from just a fixed resource base by engaging in international trade. This is to say that every nation can specialize in the manufacturing and exportation of what is only moderately more resourceful in producing, in comparison with other nations (Chowdhury, Islam, 1997). Agglomeration of economies refers to the type of economies of scale or rather scope that operates within groups of industries or firms. Intra-industry agglomeration economies are often known as localization economies and inter-industry agglomeration economies is known as urbanization economies. The above time-tested maxim of economy, boils down to a singular prognosis for economic model of Singapore-that simply put, you cannot have everything even when lacking size and resource constraints. By trying to accomplish comparative advantage in several sectors simultaneously, will only increase resource costs, reduce competitiveness and worsen negative externalities like environmental degradation and inflation. Thus it is not possible to sustain competitive advantage that is based on economies of scale, agglomeration or first-comer and cluster advantages that are derived from the policy of the government (Borrus, Ernst, Haggard, 200). Singapore has a comparative advantage in the production of electronics. Thus by the end of 1970s, the Singaporean government shifted its focus to technology and skill-intensive, industries that were high value-added. Thus there was a paradigm shift from manufacturing labor-intensive industries. Thus the government particularly focused on expansion of information technology making Singapore the largest producer of disk drives and parts of disk drives worldwide (Chowdhury, Islam, 1997). The economy of Singapore grew by 5.1% in quarter one of 2014 on a year-on-year basis. Which is much lower than last year’s 5.5% at the same time. The manufacturing and construction sectors have been accelerating and therefore driving the economy, the services sector has really slowed down. On the basis of year-on-year, the manufacturing sector recorded a 8.0% growth compared to 7.0% in the previous quarter. This fast pace of growth was mostly due to a quick a growth in the output of chemicals and rebound manufacturing of biomedical output. On the other hand, the construction sector grew by 6.5% on the basis of year-on-year in the first quarter which was an increase from the previous year’s 4.8%.This was mostly due to strong growth in the construction activities of the public sector. The city of Singapore offers several recreational facilities and public places where people can go and relax and at the same time have fun. Such places include the Jurong Bird Park which features more than 5000 birds from all over the world. The other interesting place is the Marina City Park which is along the water and is a perfect place to fly a kite, a national past time in Singapore. There is also the Mint Coin Gallery in Singapore which is an exhibition that displays a collection of coins, medallions and medals from all over the world. Some of the other recreational facilities include Singapore Cricket Club, which was a recreational hub for the British, Theme Parks-there are so many theme parks in Singapore for such a small island and it is not surprising that some of them can be ranked as world-class. Surprisingly universal Studios set the bar quite high for the whole of Asian region with a complete list of attractions and rides which includes 2 water rides and 5 roller coasters. , Underwater World, Water sports in Singapore which is quite popular and so on and so on (Tarn, 2010). Because Singapore city is a tiny island with a very high population density, there is a restriction of private vehicles so as to control congestion and pollution. Thus the prices of cars in Singapore are quite high and its only about 1 in every 10 residents that own a car. Most residents of Singapore city travel by foot, bus, bicycles, train (MRT or LRT) and taxi. There are 2 companies that operate the public train and bus transport system; these are SBS Transit and SMRT Corporation. There are plenty of taxi companies with over 25,000 taxis plying the roads. Taxis are quite popular since they are comparatively cheap in comparison with other developed nations. Singapore city is a key international transport hub especially in Asia due to its position on several air and sea trade routes. The Port of Singapore is managed by PSA international which is a port operating company and Jurong Port and was ranked as the world’s second busiest port in 2005 in regard to the number of tones handled which stood at 1.15 billion gross tons and also in regard to the containerized traffic standing at 23.2 million. This port is also second busiest in the world, second only to Shanghai in terms of tones of cargo having handled 423 tons. Apart from all that, Singapore Port is the busiest in the world for transshipment traffic and also the largest ship refueling center in the world. Singapore is also a major aviation center for Southeast Asia. It is also a break in a passenger’s journey on the Kangaroo route between London and Sydney. The Singapore Changi Airport is host to over 80 airlines that connect Singapore to over 200 cities in some 68 nations. It has been ranked as one of the finest international airports by several international travel magazines, and also has also been ranked as the world’s finest airport for the very first time in 2006 by Skytrax .Singapore’s national airlines are Scoot, SilkAir and Singapore Airlines (Cervero, 1998). Singapore city has got some of the best polytechnics and universities in Southeast Asia. Some of the universities include; Singapore Management University, Nanyang Technological University and National University of Singapore. All these universities are public autonomous. Some of the famous polytechnics include Singapore Polytechnic, Ngee Ann Polytechnic which are all government owned. Ever since Singapore improved into transport system, built world class ports and infrastructure there has been a rapid increase in land and rent rates. The value of land usually is the market clearing price for obtain ownership rights over the land. Rent on the other hand is the periodic payment the owner of the house receives in exchange for the right to use the land. Normally, the value of the land is equivalent to the discounted present value of the streams of future rents that the owner expects to receive for the utilization of his land in some productive pursuit. There are other productive inputs to land such as labor and capital which are generally homogeneous and quite mobile, so their prices are comparatively constant regardless of where they are employed. Thus Singapore has attracted so many foreigners who want to rent an office space and somewhere to sleep. Land has therefore become quite a dear and rare commodity making its utilization to be scrutinized closely before being put to any use. Buildings (sky scrapers) are closely built together so as to make sure there is not even a single square meter of land unutilized. The public housing program in Singapore especially the development and planning of new housing for the public and subsequent allocation is carried out by the Housing and Development Board. Daily management of public community houses is mostly left to the Town Clerks who are headed by the local parliamentary members. Whereas Singapore generally is not referred to as a welfare nation, it has been known for the provision of housing welfare in a scale that is large, and this really has been its defining feature. Thus the widespread housing system has taken part in a critical role of raising home ownership rates and savings, together with contributing to economic growth that generally sustained and particularly development of the housing sector. Most of consumption goods are treated as undifferentiated commodities, but when it comes to housing, it is highly differentiated well with several heterogeneous characteristics. Houses vary in size, location, age, quality, appearance, public services and school districts, to list but just a few characteristics. Economists most of the time employ hedonic models to make a description of the worth of a house as a function of its characteristics. Housing is a durable good that lasts for several years but is however subject to depreciation and upkeep over a period of time. Leasing of public land mostly goes under the phrase Government Land Sales (GLS) .This is the organ that has accomplished most of the urban development in Singapore, administered mostly by the Urban Redevelopment Authority with the HDB as a small player. Given the huge population of foreigners living, studying or working in Singapore, housing statistics and population in Singapore differentiates between non-resident and resident population. Resident population is made up of citizens of Singapore and permanent residents. On the other hand, on-resident population is made up of 19% of the total population. From the census data of 2000,40,813 or around 4.2% of households were not residents households, whereas 88% of 923,325 resident households lived in Housing and Development Board(HDB) flats,79% of the 964,138 that were occupied were HDB flats, with 21% of dwellings occupied being private sector housing. The complete housing stock in 2000 was 1,039,677 units, of which 81% were HDB housing. The rate of housing vacancy was 7%.. Singapore has got one of the lowest crime rates in the world. Reports of petty crimes such as street theft and pick pocketing which are committed at tourist destinations, hotels, airports or while traveling on public means. Violent crime is rare in Singapore. However of late there has been an upsurge of fraud involving credit card. During the earlier days, there were several incidents of theft of mobile phones by robbers and snatch thieves. According to the Singapore Police Force, crimes related to mobile phone have greatly reduced due to strict law enforcement and public education (Carl, 2006). Drug abuse is also very limited in the country due to aggressive law enforcements efforts. Singapore being a financial services and transportation hub, however, is vulnerable as conduit for money laundering, inspite of strict laws and their enforcement. The other likeiest crime is threat of terrorism. Thus terrorists are most likely to target Western interests in the nation. Potential most likely targets of terrorism may include public and commercial areas frequented by tourists and foreigners such as restaurants, hotels, clubs, bars, markets, schools outdoor recreation activites, tourist areas and places of worship (Carl, 2006). Urban transportation involves the use of automobile which is by far the most common and overwhelming choice for work commuters and other intra-urban travel in most countries. Economists view highway congestion as a significant externality problem. Most of the time, travelers only factor in their own travel costs, which include monetary and time costs, when planning whether to make a trip. They however fail to consider the additional delay time that they are likely to impose on other travelers. Singapore is faced by such common problems such as congestion in the public sector transport system and being unable to drive one’s car inside the city. Thus several residents are forced to use the common and often congested public rail system to their inconvenience. The government early in the beginning of the year, through the prime minister promised to make the public transport system better than it currently is and thus enable all the Singaporeans to make public transport their “choice mode of travel.”Singaporeans are forced to buy cars from there at very high prices which means very few can enjoy the luxury of driving a car as compared to other countries. In a summary many commuters are faced by the following issues; buses and trains that are overcrowded, inconsiderate commuters, inadequate trip planning facilities and lack of genuine and fair competition resulting in fares that are ever-increasing. Singapore’s finances are quite safe. Thus of late hedge-fund managers and bankers have been talking passionately how the Singaporean environment is clean, efficient and safe. The city’s speed of internet is 100 times better than in mainland China, with its several internal firewalls and about 8 times than that in Hong Kong. It’s also word’s major financial and transportation hub, collecting hundreds of millions of dollars daily in revenue. This makes Singapore to have a very stable financial base for herself. As I write this, Singapore is the most expensive city to live in the world. Thus the cost of living has shot up through the roof making it hard for many middle class to survive. In addition its extremely expensive to own a car, making owning one an indulgence of the wealthy, thus clearly owning a vehicle is costlier than other cities in the world. Singapore also relies on other states for water and energy supplies since it is an island of sort with no natural resources. Singapore also inspite of tremendous wealth, also lays claim to being one of the cities with the most income inequalities in the world. On the other side, Singapore has been experiencing a currency appreciation over the last decade, which has been partnered with solid inflation in price and thus the city has been rising steadily up from position 18 a decade ago. Singapore’s private banking sector has also been steadily growing making it emerge as a regional hub for several multinational companies from all over the world. This particular factor has drawn in an influx of senior managers and executives from various cities in the world, consequently raising the stature of this Island Asian city. However, there is tremendous wealth in Singapore and so many households have at least a millionaire. There is also efficient governance with few bottlenecks and no corruption. Security is also guaranteed and a clean and safe environment for doing business. Work cited Borrus Michael, Ernst Dieter,Haggard Stephen. International Production Networks In Asia. New York: Routledge Inc., 2000. Carl, Trocki A. Singapore:Wealth,Power and the Culture of Control. Singapore: Psychology Press, 2006. ChowdhuryAnis, Islam Iyanatul. The Newly Industrializing Economies of East Asia. New York: Routledge, 1997. Edwin, Lee. Singapore:The Unexpected Nation. Singapore: ISEAS Publishing, 2008. —. The Transit Metropolis:A Global Inquiry. Washington DC: Island Press, 1998. Tarn, Tan How. Singapore Perspectives 2010:Home.Heart.Horizon. Singapore: World Scientific Publishing Company Ptc Ltd , 2010. Tong, Ngiam Dow. Dynamics of the Singapore Success Story:Insights by Ngiam Tong. Singapore: Cengagae Learning Asia, 2011. http://www.guidemesingapore.com/relocation/introduction/brief-history-of-singapore?gclid=CPSW6af3pr4CFfQQtAodElAAlA http://www.tradingeconomics.com/singapore/gdp-growth-annual Read More